Grouper Warehouse, Inc. leased equipment from Southern Finance. The lease term is 5 years and requires equal rental payments of $43,308 at the beginning of each year. The equipment has a fair value at the inception of the lease of $190,000, an estimated useful life of 5 years, and no salvage value. Grouper Warehouse pays all executory costs directly to third parties. The appropriate interest rate is 7%. Prepare Grouper Warehouses January 1, 2017, journal entries at the inception of the lease.

Grouper Warehouse, Inc. leased equipment from Southern Finance. The lease term is 5 years and requires equal rental payments of $43,308 at the beginning of each year. The equipment has a fair value at the inception of the lease of $190,000, an estimated useful life of 5 years, and no salvage value. Grouper Warehouse pays all executory costs directly to third parties. The appropriate interest rate is 7%. Prepare Grouper Warehouse's January 1, 2017, journal entries at the inception of the lease. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit (To record the lease) (To record rental payment)